Monday, August 4, 2008

Build-A-Bear Earnings Call: Bearville Important for Long-Term Growth

BuildABearville is important for the long-term growth of the Build-A-Bear Workshop,Maxine Clark, Chairman of the Board & Chief Executive Bear, said inthe company’s Q 2008 earnings call last week. And it’s proceedingbeyond expectations so far: 4.6 million online characters have beencreated since its launch last November, leading to almost 20 million total visits, withdaily visits increasing over 100% from the beginning of the year.

“First, the online world is where kids play today and will play evenmore tomorrow. Simply said, this world is important for our brand tostay relevant with our core guest,” Clark explained. “Second, theonline world offers us an opportunity to create synergies between ourreal world and online world by attracting new and returning guests toour stores. And third, BuildABearville gives our bridge to otherentertainment opportunities not in the traditional retail model. We’repleased with the growth we’ve experienced so far atBuildABearville.com. The site is growing ahead of plan. [...] We talkto visitors in the world often and are getting input from Bearvillecitizens to help guide the development of the world.”

The unique advantage according to Clark is that while many major brandshave gotten involved in virtual worlds, Build-A-Bear is the only one tohave both a physical store and a virtual world. Of course, Disney hasstores in malls across America, but I don't think there's any majorcrossover. With retail playing an increasingly important role in youth virtual worlds, that is significant. Build-A-Bear is actively focusing on the relationship between the physical store and virtual world.

"And last week for instance we launched our new rooms, you can add onrooms, and we saw a 43% increase in new avatars made at buildabear.comfrom the week before, same time period Friday, Saturday, Sunday,Monday, a big phase, and because the rooms are so expensive, they’rethe most points to buy, the best way to get the most points is to buyanimals," explained Clark. "So we’ve structured those things. And wethink those things over time begin to build a huge reason why you go toa store and you buy an animal just like they’ve done for othercompanies who had no business and started from zero. So I think thoseare already monetizing. Can you say that X millions of dollars wereabsolutely totally associated to BuildABearville? No, but I think youcould say that because of the increased engagement the best customersare staying engaged and the buzz is building and new customers arecoming."